TWA-American deal expected to be completed on Monday
DALLAS – The sale of TWA to American Airlines is expected to close Monday after potential obstacles to the deal were removed last week.
AMR Corp., American’s parent, was expected to pay $742 million for TWA and assume $3.5 billion in debt pending a U.S. Bankruptcy Court’s approval.
On Friday, U.S. District Judge Sue Robinson denied a request by TWA creditors, including former TWA chairman Carl Icahn, to delay the sale. An appeals court on Saturday also denied the creditors’ request, TWA officials said. The Justice Department granted its approval Friday.
American, the No. 2 carrier before the deal, will swap positions with No. 1 United Airlines. Its newfound supremacy could be short-lived, though. The airlines will reverse positions again if United succeeds in its bid to obtain most of US Airways.
The deal presents the Fort Worth-based airline with several challenges, said Julius Maldutis, airline analyst at CIBC World Markets.
Among the obstacles are labor problems. Although TWA’s unions have agreed to the sale, leaders of American’s three unions are withholding support for the purchase because they fear the difficulty of absorbing TWA’s workers could cause turmoil.
In a letter to American chief executive Donald Carty, leaders of the unions representing pilots, flight attendants and mechanics said the airline should focus on improving benefits for its employees instead of acquiring TWA.
TWA, based in St. Louis, was formed in 1930. The airline has not posted an annual profit since 1989, and has filed for bankruptcy protection three times in the last decade. The most recent time was on Jan. 10, the day the merger with American was announced.
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